LENDING
LENDING TRENDS
IN MANUFACTURED HOME COMMUNITY FINANCING By Tony Petosa
S
Since 2000, Wells Fargo has originated more than $13 billion in financing within the MHC sector and has been named Community Lender of the Year 12 times, by the Manufactured Housing Institute. With the consideration that, as we go to print the COVID-19 crisis is being addressed, and lenders are assessing associated economic fallout, we'll provide an overview of what we perceive to be the best lending options currently available for manufactured home communities as well as some emerging trends within financing programs. The MHC sector has enjoyed an incredible run over the past several years as lenders and investors alike have recognized the strength and stability the asset class demonstrates— strong occupancy, solid rent growth, low default rates. Because of these characteristics, we have not only seen investors purchasing communities at historically low cap rates, but we have also seen lenders aggressively pursue financing for MHCs by offering historically low interest rates. So, with myriad lenders pursuing manufactured home com-
munities, it is important for owners to know what to expect in today’s financing environment when dealing with these various financing options.
Fannie Mae and Freddie Mac The agencies have been the first lender of choice for most community owners for quite a few years now. Fannie Mae saw their MHC lending volume increase dramatically after the 2008 financial crisis, and Freddie Mac also has experienced growing market share after their 2014 entrance into the community lending space. In 2019, Fannie Mae provided $2.5 billion in community financing while Freddie Mac provided $1.4 billion. The most notable recent development for the agencies was the lending volume cap structure that the Federal Housing Finance Agency announced in October. The maximum lending cap for each agency was set at $100 billion through 2020 with a noteworthy requirement that 37.5% of their total volume be dedicated to “Mission Driven Business”, formerly known as "Uncapped” business, which happens to include manufactured home communities. Another important item of »
2020 STATE OF THE INDUSTRY • MHINSIDER.COM | 29
